More Evidence That Immigrants Benefit The Tech Industry

from the drive dept

We've argued, along with many others, that it's a clear benefit to the overall economy and the tech industry in particular to have skilled and educated immigrant workers come over from abroad. Still, it's always nice to have some data to back this assertion up, just to ward off accusations of being a wild idealist. A new study published by Duke University finds that a full quarter of all tech startups between the years 1995-2005 had a immigrant either as a founder or key executive. These companies, it's estimated, employed a total of 450,000 workers, and had revenues of $52 billion. The mistake made by those who oppose immigration for economic reasons is that they think of the overall economic picture as being fixed. In other words, they look, say, at the number of jobs in existence today, and simply assume that if more people compete for them, then domestic workers will increasingly go unemployed, while overall wages will be depressed. But as studies like this show, there's nothing fixed about the economy. There's always room for new startups, while existing companies will hire more people, assuming that they're talented and can add value. As the researchers note, the process of immigration is inherently ambitious, and going through it is a sign of one's inclination to take risks. As more data like this becomes available, it's going to be an increasingly difficult argument to make that an intelligent and skilled immigrant workers somehow drag down the economy.

Reader Comments

uhhh

I think this is a dramatically different argument then any immigration issues i've heard of. I don't think ANYONE has a problem with immigrants coming into the country with cash and starting companies. Theres really no possibility of a loss here for our economy.

Re: uhhh

Jeff, it wasn't obvious to me by reading the article, but looking at the "benefit to the overall economy" link in the post, I got the impression that by "immigrant worker", the author was referring to workers in the country on an H1B visa.

I know the term is politically charged these days, but when I read the plain term "immigrant", I still think of a citizen of my home country who immigrated here permanently from another country. Using this definition, it really would be a non-story. I don't think I've ever heard anyone say, much less go on the record that legal immigration was a bad thing.

But if the author meant H1B visa holders or even illegal immigrants, well then...we got ourselves a story.

Re: Re: uhhh

Where do you people live? There have been numerous prominent people speaking out against immigrants, and yes, that included permanent legal immigrants from other countries that supposedly "stole" high-tech jobs. Beyond that, a lot of people like to bunch all immigrants together, legal/illegal, temporary and permanent and would like to see all of them end, consequences be damned.
May be to some of you the article is non-news, but to a lot of immigrants working in this country its another statistic to help in the battle with the persistent xenophobia.

long vs short term

"The mistake made by those who oppose immigration for economic reasons is that they think of the overall economic picture as being fixed. In other words, they look, say, at the number of jobs in existence today, and simply assume that if more people compete for them, then domestic workers will increasingly go unemployed"

Okay, this does happen. Having seen two cycles of it my lifetime I'll stick my neck out on this. However corellation !> causation I know. I guess it takes a long time for the energy and ambition of the immigrant to have a positive effect on the economy. Initially they arrive with little or no wealth and are a net burden though I agree this is paid back in spades later on. The pain to the comfortable, slumbering established economy is that the immigrant is more vigorous, more hungry and ambitious than the native and will take that very low paid job displacing the existing lowest rung of the ladder. This is eased in Europe since we have a uniform minimum wage. But there are side benefits to employing an immigrant worker that act as loopholes so in a straight competition the immigrant gets the job instead of the native because the employer can get away without paying certain insurance and can sometimes fire the immigrant more easily. Of course the economy is not finite, that would be absurd and preclude growth.

"A new study published by Duke University finds that a full quarter of all tech startups between the years 1995-2005 had a immigrant either as a founder or key executive."

Not surprising. It's not just the ambition, many immigrants I have met are very well educated, to a much higher standard than my fellow countrymen.

"As more data like this becomes available, it's going to be an increasingly difficult argument to make that an intelligent and skilled immigrant workers somehow drag down the economy."

Indeed. But don't forget that there is no way to select immigrants on their education and ambition. You must welcome all. There are still many who do move to another country and cannot contribute. Sometimes this is because they were tortured or in wars and suffer serious mental illness or disability. After Bosnia we took a lot here. That is why we are very careful to discriminate (in a positive way) between economic migrants and refugees. I think if you conducted the study over decades instead of years you would see that even the weakest and most damaged refugees end up loving the country that welcomes them and eventually their economic potential blossoms.

Re: Re: Tech Fraud?

Hacking software product keys, selling pirated windows? Americans don't do that stuff. Enforcement of crime against high-tech immigrants is not easy either. Immigrant criminals can hide back in their home countries, change their identities, speak in language barriers.

Re: Re: Re: Tech Fraud?

Re: Re: Re: Re: Tech Fraud?

Yeah, show me the stores in America that sell pirated copies of windows. Let me know if you 1) find any and 2) prove they aren't run by immigrants.

Plenty of countries other than the US have experimented with allowing in more immigrants, and the results have usually not been very successful. Europe today is home to frequent race riots and immigrant underclasses, while Japan has experienced an astronomical increase in crime. Tokyo is no longer a safe place to walk around at night. In the end, immigration is just a tool -- it may raise productivity in some industries in the short run, but can also increase overall criminal activity and harm society.

Re: Re: Re: Tech Fraud?

The crimes you are accusing "immigrants" of committing are more often committed by people of foreign nationality IN THEIR OWN COUNTRY.

The U.S. has a fairly extensive network of law enforcement agencies clamping down on that - here in the U.S. However, not all other countries are so inclined. It makes MUCH more sense to commit those kinds of crimes in - say just for the sake of argument - a certain region of Africa to remain nameless, than to come here and risk actually getting caught.

Re: Re: Re: Tech Fraud?

i amazed by your quote 'americans don't do that stuff.' who gave you the idea to even say something like that. any stats to support what you are saying?
by the way people. if there is an issue, it will be from the INS as well as the DMV. its the country and this government!!! the whole place sucks. soon you will see people are moving over to china, so why worry.

Re: Re: Re: Tech Fraud?

i amazed by your quote 'americans don't do that stuff.' who gave you the idea to even say something like that. any stats to support what you are saying?
by the way people. if there is an issue, it will be from the INS as well as the DMV. its the country and this government!!! the whole place sucks. soon you will see people are moving over to china, so why worry.

immagrant money still stays in the US economy

Another issue to keep in mind is that perhaps most of the money that goes to immigrant workers stays in the US economy. For example, by paying rent, paying taxes, buying groceries and other living expenses, the majority of an immigrant worker's income goes right back to US businesses.

One problem with a lot of current analysis (at least popular analysis, because I have not read any research papers on this topic) is that we assume that the immigrant worker acts as an economic blackhole without considering the fact that his or her income must ultimately go back into the US system.

The exception here, of course, would be those workers who send a significant portion of their income outside of the country to help out family members. It would be interesting to see a study that analyzes this phenomenon.

Re: immagrant money still stays in the US economy

When immigrants start slaughtering sheep in their neighborhoods, smash the windows of existing residents, cause property values to plummet, drain social service and health care resources, flood school districts with needy children, bring their sick grandparents to get free healthcare in the host country, spread tuberculosis, bring their shellshocked uncles and lowlife cousins, then they may cause catastrophic damage to the host country.

But we know that academic research will never allow these kind of measures, because it's "too racist". Only studies that narrowly define benefit to a particular industry will be allowed publication.

Re: immagrant money still stays in the US economy

Actually, there have been studies that have shown that a large portion of the money earned by immigrants, particularly illegal immigrants is exported outside of the country using money-order services.

Also, I don't think your assertion about rent, etc., is so easily proven. For example, there are large numbers of immigrants that pay rent in significantly reduced amounts because they violate zoning laws and live in overcrowded conditions. So instead of 10 couples paying rent in 10 apartments, they pay for the rent of a single apartment.

Re: Re: immagrant money still stays in the US econ

Easy one there: When the ilegal aliens (Proper Title) go get a money order to send money anywhere except to the United States then the financial institution or source of the money order would be required by law to keep say 30% of it and send to the IRS for payment on the huge drain of resources to feed and house and provide medical services for the criminal illegal aliens.

Huh?

This is a very strange way to go about supporting illegal immigrants. The types of immigrants you speak of are H1B visa holders. They are LEGAL and WELCOME in the country.

The issue at hand is the ILLEGAL immigrants who are taking low paying jobs and holding the wages of working class americans down. Their families are also becoming a drain on our economy.

The flow of immigrants MUST be controlled and DOCUMENTED for security reasons, obviously.

Tighten up the borders and let people in legally. Legal immigrants pay taxes, don't performe identity theft and have no reason to love outside the scope of the law. This is a win win situation for all of us - let's do it right for once.

Excessive low wage unskilled workers only benefit the very rich, not the rest of us....

I think it's important to look at the history of the United States as a supportive argument for immigration. The US has achived so much in so little time because it was made up of people who with completely different backgrounds and ideas. If everyone in the country thinks the same way, then the country can only go one way, which is what is happening in the US now. The more a country mixes up its collective think tank, the more new and improved ideas can be created.

another brilliant "aha" moment

In 2004, a study was done and among the findings:
"Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household."
"If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion."
"Costs increase dramatically because unskilled immigrants with legal status -- what most illegal aliens would become -- can access government programs, but still tend to make very modest tax payments. "
"The fact that legal immigrants with few years of schooling are a large fiscal drain does not mean that legal immigrants overall are a net drain -- many legal immigrants are highly skilled. "

In other words, LEGAL immigrants = good for economy; ILLEGAL immigrants = bad for economy, and that's always been the assertion, effectively making this a non-story.

Where has everyone been?

I am amazed at the number of people saying "no one has a problem with legal immigrants." Did you all just skip the past decade of high tech industry development? There have been numerous attacks on H1B workers as well as any other type of LEGAL immigrant workers in high tech industry. The claim as usual was that they were taking jobs away from the American professionals and that they depressed the wages.
How is it that no one remembers that here?

All if you bringing up illegal immigration in here are just confusing the matter and apparently that is due to ignorance of a long standing conflict.

P.S. Please continue to ignore dorpus, in case no one noticed, he is just trolling. As usual.

Re: Where has everyone been?

You're referring to the unproductive H1B workers who spoke English very poorly, had zero social skills, wrote illiterate documentation, and just caused more problems at the office, whining about how their country is "better" than America? I worked next to many of them for the past decade in the IT industry. American companies ended up hiring armies of technical writers and American programmers to clean up the mess that H1B workers left behind, after poisoning the office with their toxic attitudes and hair oil.

Of course, it doesn't prevent short-sighted American employers from repeating the same mistakes, after management is replaced by the next generation of incompetent 24-year-old MBAs foaming at the mouth about "free markets" and "unrestricted labor".

Re: Where has everyone been?

I am amazed at the number of people saying "no one has a problem with legal immigrants." Did you all just skip the past decade of high tech industry development? There have been numerous attacks on H1B workers as well as any other type of LEGAL immigrant workers in high tech industry.

I think the problem is a difference in understanding of the term "immigrant". You can look it up for yourself, but basically it means someone who comes to a country to live permanently. While many H1B visa workers might have the long term goal of becoming citizens of the United States, that does not necessarily qualify them as immigrants.

So, when people (such as myself) are saying they haven't experienced much backlash against "immigrant workers", I don't think they're talking about H1B visa holders. I think your amazement would fall away if you discounted the H1B's.

It's too bad the author wasn't more clear about what type of immigrant was the topic of the article.

sigh!

Or in other words, People who are bad for the economy = ILLEGAL immigrants; People who are good for the economy = LEGAL immigrants.

The argument is entirely circular and a matter of self referential definition. It's no argument at all. Legal, illegal, that is all nonsense. Step out of your blinkered framework for a moment. The nub of the story is very clear and is being completely ignored as you wrap yourselves up in political claptrap that reinforces existing prejudices.

Try this thought experiment:

Take 10 million people and two fresh uninhabited countries. Into the first country put 5 million people. Into the second country, which has half the landmass and half the resources, put the other 5 million.

Come back in 100 years and what do you see?

The second country has built cities, roads and has a thriving economy with a service sector and industrial infrastructure. The first country are all still subsistance farmers.

Why? Because 'why bother?"

Humans are not lazy by choice. Naturally they are industrious, curious, cooperative and will work to meet the requirements necessary for their survival.

When a large influx of immigrants arrive in a country in one go, then yes, they present a temporary burden. They need to learn the language, adopt the norms, find housing and integrate. This means a temporary period where they present a drain on the economy. In our societies they immediately displace the lowest paid workers because cheap labor capitalists will take advantage of them by paying them less if they are legally able to. This was the same when conquest brought slaves. It is also why war and sharp economic differentials are bad, they create a potential and consequent current of migration that can overwhelm. Immigration is not bad per se. Once the world is a fairer place the net flow will be unity, Kirchovs laws apply here.

In the long term, if left to their own devices, every man and woman carries their own weight in society and those that have come from the poorest roots often rise to become the most productive if given the chance. That is the "American Dream".

Re: sigh!

Globally speaking, successful immigrants are the exception rather than the norm. Europe is home to Gypsy immigrants, who after a thousand years in Europe, remain unsuccessful and a burden on European societies. Turkish immigrants in Germany, now in their 3rd or 4th generation, remain unsuccessful. America today is home to vast hordes of 2nd- and 5th-generation Hispanic Americans who breed babies at age 13 and spend their adult lives in prison.

Immigration is just a tool -- it is not the magic panacea that free market ideologues want it to be.

Re: sigh!

Wow, way to prove statistics can be skewed by any monkey who can regurgitate numbers. A reverse correlation does not exists simply because a one way relationship does.

Last year it was estimated that illegal mexicans brought in $26Billion dollars. Now take the fact that Mexico acknowledges $20Billion in remittance. Now divide the difference by the estimated 10-12 million illegals and you have $600 per immigrant to live on....Funny how those numbers don't add up to me.

Also why do you think that Mexico is hellbent on making sure US immigration laws don't change? Because they are benefiting in a major way from illegals in the US. No health care, education, etc and just fistfuls of cash.

I dont get it

I do think immigration is great, but not illegal immigration. Granted, I also feel that most illegal immigrants aren't quite the burden that everyone claims they are. I seriously doubt that most of them are crossing the border in hopes of living off the fat of the government. I believe most are people trying to find something new, or something better for themselves.

I just think they need to go through the proper channels. If the channels aren't there, then complain about that. But please, stop complaining about the poor illegal immigrants and all of their hardships.

Re: I dont get it

I believe most are people trying to find something new, or something better for themselves.
Foofdawg, I agree with this statement and generally your post up to this point, but I have to respond your last assertion...

I just think they need to go through the proper channels. If the channels aren't there, then complain about that. But please, stop complaining about the poor illegal immigrants and all of their hardships.
The implication of your statement is that if a particular law is imperfect or flawed, it's OK to ignore it or that the lawbreakers should free from not only be prosecution, but also from criticism.

I personally think that America should "go through the proper channels" and increase the number of allowed legal immigrants into the country. And I also agree with you that most illegal immigrants have the best intentions. But I don't think that an illegal immigrant should be given carte blanche or be protected from criticism.

overall Stat's

this article is very encouraging and (ignoring the We Hate Immigrants or H1B Holders comments) it would be refeshing to see Duke U. regurgitate some stat's on Immigrants ( legal and illegal) across all sectors of the U.S. economy, not just the Tech. world

Outsourcing vs. Immigration

I'm not trying to change the topic, but I'm more concerned about outsourcing than immigration, legal or illegal. Even illegal immigrants have to eat and buy things which benefits those people and states with nifty sales tax (Not in MT unfortuantely).

And as far as crime goes, it's always going to go up as long as there are racists in the world. Did anyone stop to think that maybe crime is going up because people are lashing out against the immigrants, not the other way around?

As far as outsourcing goes, scary world indeed! I have no problem with talking to people with accents, but I always feel like the tech support people in India just don't care as much as I do. I'm sure some do, but it's hard to care about anyone's problem half a world away.

In short, I like people in all shapes and forms. Immigrants, even illegal ones, are worth the $2.00 in taxes from my paychecks. =)

Re: Outsourcing vs. Immigration

And as far as crime goes, it's always going to go up as long as there are racists in the world. Did anyone stop to think that maybe crime is going up because people are lashing out against the immigrants, not the other way around?

You mean immigrants don't come from countries where both crime and racism is rampant in the first place?

In short, I like people in all shapes and forms. Immigrants, even illegal ones, are worth the $2.00 in taxes from my paychecks. =)

You may be paying a lot more than $2 out of your paycheck when immigrants bring their grandparents, who suck $1 million out of the health care system before dying anyway. Oh and, enjoy paying the property taxes to put their kids through school too. When you're done with that, you'll be required to pay more state taxes to support state law enforcement and social services for the trouble that immigrants cause.

Oh but that's right, the immigrant who makes $40k per year, brings his huge family over to suck our system dry, then moves back to his home country anyway is soooo good for our economy. Right.

Re: Re: Outsourcing vs. Immigration

Immigration is the source of fuel for the melting pot that is a fundamental concept of the US.

That being said, outsourcing AND immigration are both really really bad - if you happen to be an engineer. I see the problem more as - when people are willing to do your job for less, or they are naive enough to do your job for less than they could make, that it drags you down by association. no one is going to pay me 150k a year when they can pay Habeeb 50k. A lot of tech guys coming in from overseas are NOT business savy and do tend to accept less.

around here it feels like engineers are tools or mules that are the engine for making the economy turn. Not a good role.

This is typical nonsense

This is the standard smoke and mirrors (one might even say lies) used all the time to confuse people about the illegal immigration issue. The vast majority of people have no issue at all with legal immigration. It is the illegal immigrants we take issue with. But the people employing the smoke and mirrors are seldom intellectually honest about the differentiation between the two.

Re: This is typical nonsense

This is the standard smoke and mirrors (one might even say lies) used all the time to confuse people about the illegal immigration issue. The vast majority of people have no issue at all with legal immigration. It is the illegal immigrants we take issue with. But the people employing the smoke and mirrors are seldom intellectually honest about the differentiation between the two.

You hardly seem to be honest yourself about the fact that a lot of people in fact have a problem with legal immigration as well. Tech industry more so than others. At least you are not using "smoke and mirrors" and just flat out went for denial approach. Way to go.

Symantec software are very professional but not so much user friendly. I am still a bit angry with the anti virus software I was using from Symantec, cause I need a technician to use it, and a three month course to learn how to use it:)